NEW YORK: US Treasury yields fell on Thursday, with benchmark yields hitting near five-month lows as US President Donald Trump's favorable view of low interest rates intensified this week's bond market rally that was underpinned by geopolitical worries.
Trump's rate view appeared in a Wall Street Journal interview published late Wednesday, in which he also said he likes and respects Federal Reserve Chair Janet Yellen, whose term ends in 2018, although he was critical of her during his presidential campaign.
"There has been this flight-to-safety for bonds with a lot of geopolitical risks. Then you have comments from Trump in favor of low rates and now he might keep Yellen," said Larry Milstein, head of US government and agency trading at R.W. Pressprich & Co. in New York.
The yield on 10-year Treasury notes was on track for its biggest weekly decline since July 2016, while the gap between two-year and 10-year yields contracted to its tightest since Nov. 9 after Trump's presidential win.
Trump's comments on interest rates and Yellen, as well as his comment that the dollar was too strong, came as his administration sought to deal with its involvement in the civil war in Syria and with North Korea's nuclear weapons program.
Investors have also been worried about the tight French presidential election on April 23. Opinion polls raised concerns that hard-left candidate Jean-Luc Melenchon and far-right leader Marine Le Pen, who are both anti-EU, could end up in a runoff next month.
Benchmark 10-year Treasury yields were down over 3 basis points at 2.261 percent after hitting 2.218 percent earlier Thursday, which was the lowest since Nov. 17.
The 30-year bond yield was down over 2 basis points at 2.907 percent after falling to 2.870 percent, a level last traded on Nov. 10.
The US bond market will shut early at 2 p.m. EDT (1800 GMT) ahead of the market holiday on Good Friday.
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